Kone Elevators India Pvt Ltd., CHENNAI V. DCIT, CHENNAI

ITA 891/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4235 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTHI KRISHNAN
• Assessee Lawyers: G BASKAR
• Keywords: Rectification of order; Opportunity of being heard
• Section: 43B; 143(3); 147; 148; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.891/MDS/2016 ( / ASSESSMENT YEAR: 2006-07) M/S. KONE ELEVATOR INDIA PRIVATE LIMITED, C/O. M/S. DR. ANITA SUMANTH, G.SUSHEELA, G. ALEXANDER, K. ANISH UNNI, ADVOCATES, 51/24, NUNGAMBAKKAM HIGH ROAD, CHENNAI 600 034. VS THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II (4), CHENNAI 34. PAN: AACCK2567P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : SMT. JAYANTHI KRISHNAN, CIT /DATE OF HEARING : 24.04.2017 ! /DATE OF PRONOUNCEMENT : 19.06.2017 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-8, CHENNAI DATED 21.01.2016 IN ITA NO.210/2013-14 FOR THE ASSESSMENT YEAR 2006-07 PASSED U/S.250(6) R.W.S. 15 4 OF THE ACT. 2 ITA NO. 891/MDS/2016 2. THE ASSESSEE HAS SEVERAL GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERR ED IN UPHOLDING THE ORDER PASSED BY THE LD.AO U/S. 154 OF THE ACT, WHEREIN THE SALES TAX EXPENDITURE OF RS.12,37,934/- WAS DISALLO WED INVOKING SECTION 43B OF THE ACT. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, WHO HAD FILED ITS RETURN OF INCOME AND THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT R.W. S. 263 OF THE ACT ON 31.03.2013. THEREAFTER, IT WAS NOTICED BY T HE LD.AO THAT THE ASSESSEE HAD NOT PAID THE SALES TAX EXPENDITURE OF RS.12,37,934/- CLAIMED IN THE RETURN OF INCOME AS D EDUCTION WITHIN THE TIME LIMIT SPECIFIED UNDER THE ACT AND THEREBY VIOLATING THE PROVISIONS OF SECTION 43B OF THE ACT. THEREFORE LD. AO OPINED THAT DISALLOWANCE OF THE SALES TAX NOT REMITTED IN THE G OVERNMENT TREASURY WITH IN THE DUE DATE OF FILING OF THE RETU RN OF INCOME AS DEDUCTION IS AN OMISSION ON THE PART OF THE LD.A.O WHILE COMPLETING THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT PURSUANT TO CORRECTION U/S.263 OF THE ACT AND THERE FORE ISSUED NOTICE U/S.154 OF THE ACT FOR RECTIFYING THE APPARE NT MISTAKE. THEREAFTER THE LD.AO REWORKED THE TAX PAYABLE BY DI SALLOWING THE 3 ITA NO. 891/MDS/2016 AMOUNT OF RS.12,37,934/- U/S.43B OF THE ACT AND PAS S ORDERS U/S.154 OF THE ACT. 4. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BECAUSE HE WAS OF THE VIEW THAT THE LD.AO HAD ONLY RECTIFIED THE MISTAKE APPARENT ON RECORD U/S.154 OF THE ACT BASED ON THE AUDIT REPORT. THE RELEVANT PORTION OF THE ORDER IS EXTRAC TED HEREIN BELOW FOR REFERENCE:- THE ASSESSING OFFICER RECTIFIED THE ASSESSMENT BAS ED ON THE COMMENTS GIVEN IN AUDIT REPORT SUBMITTED BY THE APPELLANT AT THE TIME OF FILING OF THE RETURN OF INCOME. THE RELEVANT PART OF THE AUDIT REPORT IS A S FOLLOWS: ----------------------------------------- ----------------------------------------- ----------------------------------------- ------------------------------------------ THE AUDITOR CLEARLY MENTIONS THAT SALES TAX AMOUNT OF RS.12,37,934/- WAS A PROVISION FOR SALES TAX DEMAND AND THEREBY MEANING THAT THIS AMOUNT WAS STILL PAYABLE AT THE TIME OF FILING OF THE RETURN OF INCO ME BY THE APPELLANT. IN THE APPELLANT'S OWN CASE FOR THE A.Y. 2001-02 A RECTIFI CATION ORDER DATED 15.02.2005 WAS PASSED BY THE ASSESSING OFFICER AND THE RELEVAN T PART OF THAT ORDER IS AS UNDER: AS REGARDS, THE DISALLOWANCE MADE U/ S. 43B, THE DI SALLOWANCE OF RS. 83,07,613/ - WAS MADE IN THE ASSESSMENT ORDER FOR THE REASON OF NON PAYMENT OF OUTSTANDING SALE TAX LIABILITY. THE ASSESSEE HAS NOW FURNISHED THE DETAILS OF PAYMENT MADE WITH EVIDENCES FOR THE SAME TO THE EXTENT OF RS. 79 , 1 7,666/ - AND DETAILS OF SALES TAX - TDS MADE UPTO 31.03.2001 TO THE EXTENT OF RS. 7,62,370/ -. THE ASSESSEE'S CLAIM IS VERIFIED AND THE DISALLOWANCE MADE U/ S. 4 3B IS WITHDRAWN. THUS, THE ASSESSING OFFICER ALLOWED THE TAX PAYMENT U/S. 43B AFTER THE APPELLANT PRODUCED DETAILS OF PAYMENTS MADE WITH EVIDENCES. I N THE PRESENT CASE, THE APPELLANT HAS NOT FURNISHED ANY SUCH EVIDENCE MOREO VER THE PASSING OF THE ORDER U/S. 154 IS BEING OBJECTED TO IN THE GROUNDS OF APP EAL. THE APPELLANT'S OBJECTION TO THE ORDER U/S. 154, UNDER CONSIDERATION IN THIS APPEAL, HAS NO BASIS SINCE IT HAS BEEN A MISTAKE APPARENT FROM RECORD AND IN A SIMILA R INSTANCE THE APPELLANT HAD ACCEPTED THE RECTIFICATION ORDER FOR THE A.Y. 2001- 02 WHEN THE ISSUE WAS DECIDED 4 ITA NO. 891/MDS/2016 IN ITS FAVOUR. THE APPELLANT CANNOT APPROBATE AND R EPROBATE DEPENDING UPON WHETHER AN ISSUE IS DECIDED IN ITS FAVOUR OR NOT. S ECONDLY, THE APPELLANT CONTENTION THAT NO OPPORTUNITY OF BEING HEARD WAS G IVEN BEFORE PASSING OF THE ORDER U/S. 154 IS ALSO BASELESS SINCE THE ASSESSING OFFICER CLEARLY MENTIONS THAT A NOTICE U/S. 154 DATED 26.04.2013 WAS SERVED ON THE APPELLANT PROVIDING AN OPPORTUNITY OF BEING HEARD AND IN RESPONSE THE APPE LLANT FILED A REPLY DATED 07.05.2013 BEFORE THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, THE GROUNDS TAKEN BY THE APPE LLANT CHALLENGING THE JURISDICTION OF THE ASSESSING OFFICER IN RECTIFYING THE ASSESSMENT MADE U/S. 143(3) R.W.S. 263 HAVE NO BASIS AND ARE THEREFORE DISMISSE D. 5. BEFORE US THE LD.AR SUBMITTED THAT THE LD.AO HAD VIRTUALLY REOPENED THE ASSESSMENT AND AFTER SCRUTINIZING THE ISSUE ONCE AGAIN WHICH WAS ALREADY CONSIDERED AT THE TIME OF A SSESSMENT EARLIER, RECALCULATED THE DISALLOWANCE ON THE PRETE XT OF RECTIFYING THE MISTAKE APPARENT ON RECORD. HOWEVER, THE ACT C OMMITTED BY THE LD.AO WAS NOT RECTIFYING THE MISTAKE APPARENT O N RECORD, BUT REEXAMINING THE ISSUE ONCE AGAIN AND THEREBY MODIFY ING THE ASSESSMENT MADE EARLIER. HE FURTHER ARGUED STATING THAT THE ENTIRE ISSUE WAS DEBATABLE AND IT CANNOT BE TERMED AS MISTAKE APPARENT ON RECORD WHICH IS REQUIRED TO BE RECTIFIA BLE U/S.154 OF THE ACT. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND REQUESTED FOR SUSTAINING TH E SAME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT IN AN ISSUE WHICH WAS CONSIDERED AND DECIDED BY 5 ITA NO. 891/MDS/2016 THE LD.AO AT THE TIME OF ASSESSMENT, THE AUDIT TEAM FOUND CERTAIN DEFECTS AND THE SAME WAS POINTED OUT. WHEN SUCH DE FECTS ARE POINTED OUT, THE LD.AO OUGHT TO HAVE REOPENED THE A SSESSMENT AND EXAMINED THE INCOME THAT HAD ESCAPED TAX BY INV OKING THE PROVISIONS OF SECTION 147 & 148 OF THE ACT. INSTEA D, HE HAD TAKEN SHELTER U/S.154 OF THE ACT, AND IN THE GUISE OF REC TIFYING THE MISTAKE APPARENT ON RECORD RECOMPUTED AND MADE DISA LLOWANCE BY INVOKING SECTION 43B OF THE ACT. THIS ACT OF TH E LD.AO DOES LACK JURISDICTION AND IT IS AGAINST THE PROVISION O F THE ACT. THEREFORE, WE HEREBY ANNUL THE ORDER MADE BY THE LD .AO AND ACCORDINGLY THE ORDER OF THE LD.CIT(A) WILL ALSO NO T SURVIVE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 19 TH JUNE, 2017 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) ' #$ /JUDICIAL MEMBER #$ / ACCOUNTANT MEMBER %' /CHENNAI, &# /DATED 19 TH JUNE, 2017 JR # () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF